L.A.-area residents Ron Lebel and Randall Sanada were among hundreds of private pilots, government officials and suppliers captivated by the Eclipse 500, a low-cost, fuel-efficient business jet that they believed would revolutionize general aviation.
But the company that built the planes, Eclipse Aviation Corp., which was launched before the dot-com implosion of a decade ago, eventually became a subprime-era disaster with wings.
With losses of more than $1 billion, the bankrupt Albuquerque, N.M., company, which was supposed to churn out business jets like assembly-line autos, is considered the costliest startup aviation failure in modern history. And numerous L.A.-area people and companies were caught up in its flop.
Those who bought the planes now have a problem: If the company can? be salvaged, they won? be able to get replacement parts and the planes ?which cost $900,000 to $2.5 million, depending on when they were purchased ?will be virtually worthless. So they have formed a group that is trying to buy the company out of its Chapter 7 bankruptcy.
?here is no after-market for planes like you have with cars ?if you can? get FAA-certified parts for your plane, you?e left with a very expensive lawn ornament,?said Kevin Padrick, senior principal of Portland, Ore.-based Obsidian Finance Corp., which is handling the group? negotiations with the bankruptcy trustee.
Among the concerned parties is Eclipse enthusiast Alfred Mann, chief executive of Valencia-based biotech MannKind Corp. The L.A. billionaire sunk more than $100 million into the company and joined its board.
Another victim of the company? collapse is Carson-based Ducommun Inc., which supplied the fuselage and other components for the plane. The company took a $2.9 million write-off in the first quarter due to the Eclipse bankruptcy.
Pilots like Lebel and Sanada, and others in Los Angeles, are preparing to sink millions into a last-ditch effort to buy the bankrupt company? assets to keep their own Eclipses in the air.
Even some prospective owners who paid as much as $800,000 in deposits but never received their plane are climbing on board. Sanada, whose Westlake Village jet management and charter business Jet-Alliance flies four Eclipses, is trying to buy about 25 used Eclipses from a bankrupt Florida charter company in hopes of selling shared ownership.
?or so many people, this was their dream, their opportunity to own a jet, and in some cases they even borrowed the money,?Sanada said. ? think it? a fantastic plane, unlike anything I?e ever owned, and it? a tragedy what has happened.?p>Mann, who at one point was the company? largest investor, owns two Eclipses. He is reportedly part of the Eclipse Owners Group, which is trying to buy the company, although group representatives would not confirm that. Mann was traveling overseas and could not be reached for comment.
?t lacks some of the features you? expect in a jet, but people who own the plane love the plane,?said Lebel, a retired Sherman Oaks engineer. ?t? quiet, fuel-efficient, comfortable and fast, and has a sports car-like quality to it.?p>At one point, the plane? developer, former Microsoft engineer Van Rayburn, insisted he? be able to produce 1,000 planes a year. His theory was that mass production would allow lower prices. But that concept never translated into reality. So before production halted nearly a year ago, Eclipse had delivered only 259 jets since early 2007, many with IOUs for upgrades that would allow plans to meet full Federal Aviation Administration certification for harsher weather conditions.
Even though the price of the plane soared to $2.5 million, the company couldn? make a profit. Eclipse filed for Chapter 11 in November and then for Chapter 7 in March.
Owners fear that if they don? buy what? left of the company, someone else will. An unfriendly owner could lock up the technology for competitive reasons or charge a steep premium for parts and service.
The group? opportunity to make a binding bid could come in the next several weeks, said Patrick of Obsidian. He owns several aircraft but never took possession of his own Eclipse 500 because the company failed to install deicing equipment necessary to safely fly the jet in the Pacific Northwest.
The group is asking each member for at least $150,000. Group members won? say how many members it has or how much money has been raised.
In its heyday, Eclipse had a plenty of cheerleaders. The state of New Mexico and city of Albuquerque provided incentives and financing to lure the job-generating venture to their area. FAA officials were enthusiastic about the plane because the promised popularity of so-called very light jets would help justify installing next-generation air control equipment at airports around the country.
Ducommun, better known for supplying parts to commercial jetliners and military helicopters, saw the jet as a way to break into the general aviation market. It won the contract to supply fuselage and cockpit skin panels.
But there were plenty of skeptics, particularly Richard Aboulafia, vice president for analysis at the defense and aviation analyst firm Teal Group in Fairfax, Va.
?ou had this completely unrealistic price based on a completely unrealistic production rate that was going to be sold to this huge, but unproven base of customers,?Aboulafia said. ?his formula worked as long as people who didn? know enough about aviation economics were willing to give Eclipse money. As soon as they stopped, reality took hold.?enews_Column=0
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